Shippers want transparency from the carriers, but what is it?

There is some confusion spreading around the use of two seemingly interchangeable words “visibility” and “transparency”. Both words are very important in shipping and logistics, but they are not the same. They describe different problems and they can’t be solved by the same solution.

Visibility is all about obtaining "status of the freight movement at any given point in time".  But beware. Many software vendors addressing this space may offer as little as “rough geographic location” of the freight based on the location specific sensor and signal (AIS for ships, GPS for trucks and rail) and a machine learning model calculating Estimated Time of Arrival at subsequent nodes in the supply delivery network (port, warehouse/logistics center, delivery dock). For some shippers that may be enough, but if the shipper wants to have advanced insight into why their freight is showing up on the map “there” and not “here”, this alone will not suffice.

The more useful visibility solutions combine software with sophisticated IoT devices installed inside or outside of the freight packaging to provide both geographical location and the status of the freight inside the transportation packaging. Good example of this could be the traditional carrier-owned containers. Relying on container carrier offering their own devices means relying on a single IoT installed inside the container which collects data on temperature, humidity, vibration and any specific factors that could be critical to preserving the shipment inside the container.

Usually, only the carrier can query such a device during the journey and the shipper must work with the carrier to obtain the data stream from the device for their own analytics and decision making. This relates to the huge cost of broadband bandwidth at sea, not something that is willingly given for free to shippers anxiously obtaining real time data feeds from the devices installed on containers carrying their cargo. Some time ago Maersk updated only their reefer containers with Traxens IoTs. Current trend is to equipe the whole equipment fleet, as done by Hapag Llloyd rolling out IoTs from Nexxiot AG and ORBCOMM to their entire container fleet of about 1.6 million boxes.

The shippers can still purchase their own IoTs and associated software, but then it is their responsibility to include their IoTs with their shipments, collect them on arrival and to ensure the IoTs are returned to the locations from where their containerized goods originate for repeated use. The freight tracking software (not the full Transportaiton Management System) may come from the manufacturer of the IoT or it could be purchased independently of the IoT.

To learn more about visibility check out this article “Now you see it, now you don’t. Multiple shades of supply chain visibility.”

Transparency, in context of shipping, is not about knowing freight’s status, but about immediate awareness of the decisions taken by ANY party affecting the status of shipper’s freight. For example, the carrier can decide to cut-an-run leaving some containers waiting in the port for the next vessel. Software company selling vessel's ETA in the next port will not be aware of this decision and the fact that while the particular vessel is moving, the containers are still on the berth.

Transparency can be only enabled by digitalization of the processes stretching from quoting through pre-booking, booking, in-transit events, post-landing events, to post-delivery settlement. It is immediatelly clear that such digitalization has to span multiple companies/organizations involved with getting the freight from A to B (even if transshipment ports are involved). Manual processes which don’t create corresponding shareable digital record are the bane of transparency. Only digitalized processes produce traceable/ready for analysis data automatically detecting and automatically documenting events throughout the process of handling customers' cargo and any decisions (including reasons/justifications) which had been made by whom and actions that have been taken that impacted one or both of the two outcomes important to any supply chain manager: transit time and total cost of transit.

Look at the following graphic to understand just a sample of decisions taken by various parties that will influence one or both outcomes so important to the shippers. It is very difficult to create full situational awareness for the shipper among so many decisions taken by different parties. Necessity to integrate data from multiple portals is very obvious, if the shipper want to maintain true link between the consequences of decisions taken by others and their ability to plan/re-plan their supply chain execution.

As you can see in the above diagram, a combination of visibility and transparency enables the shipper to optimize their own decisions in planning/re-planning their own supply chains operations. Shippers can combine signal originating from the IoT attached to the cargo and answering the ”where is my cargo and what state is it in" question with active monitoring of decisions affecting their freight from the moment the quote is provided to the moment the cargo is handed over and bills are settled. Essentially, transparency makes the proverbial “fine print” penetrable and the consequences of actions predictable, especially when it comes to recognizing whose decision affected the total transit time or/and the total cost of the carriage.

Since multiple parties will make decisions about the freight, multiple systems creating data in multiple formats will be involved. Many of the companies still default to old EDI messaging, a standard that severely limits what data flows between the systems and how is it acted upon. Leaving EDI behind for good still seems nearly impossible, as data format standards that enable all systems in use by all freight handling/management parties to exchange data and to share data and decision insights with the shipper are still amiss. Initiative like Digital Container Shipping Association (DCSA) is a good start, but even they are still miles away from the moment when transparency like what we imagine becomes possible. Keep that in mind when evaluating the solutions for integration with your existing systems.

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